India’s Defence Budget 2023-24: Decoding the Algorithm of Numbers

Rahul Rawat, PhD scholar, Diplomacy and Disarmament division, School of International Studies, JNU

The year 2023 holds significant importance for India's national security due to several factors.  First, India faces an imminent threat and a serious challenge from its Himalayan neighbour, China. Second, India has undergone fundamental reforms like the AGNIVEER scheme meant to cut manpower and pensions costs in the long term to mobilise funds to build effective, more agile and technologically superior armed forces. Third, India’s theaterisation of commands and major acquisitions and indigenisation are in the pipeline, shaping the future trajectory of the warfighting capabilities of Indian armed forces. Given these compelling reasons, an increase in the overall defence budget and specifically the capital outlay part showcase the willingness of the government to manage national security challenges seriously.

DECODING THE NUMBERS -

Overall, the allocated defence budget for 2023-24 is worth 5,93,537.64 crores INR, while last year, the amount was 5,25,166.15 crores INR. The defence budget constitutes 13.18 percent of the total union budget for the year 2023-24.

The current budget shows an increase of 13.14 per cent compared to the 2022-23 overall defence budget. In terms of percentage increase, the 2022-23 budget saw an increase of 9.83 per cent compared to the 2021-22 defence budget.

In terms of the share of the overall budget, a marginal decrement of 0.2 percent is evident in the defence budget compared to last year.  

This makes the current year's budget more significant in terms of larger numbers and with a good percentage hike. The hike can be attributed to China’s belligerent stance vis-a-vis India and lack of signs of peace even after the first border incident in Galwan valley. The Border Roads Organization has been allotted 5,000 cr INR as part of its capital budget to ensure better connectivity in critical border areas, especially in India’s northern border areas. The figure shows an increase of 42.85 per cent in the capital part compared to 2022-23 budget.

Regarding the capital outlay, the allotted budget for 2023–24 is worth 1,62,600 crores INR, whereas, for 2022–23, the figure stood at 152369.61 cr INR. There is an evident increase of 6.71 per cent from the last year’s capital expenditure part of the defence budget.

Similarly, 2022-23 also saw an increase of 12.81 per cent in capital outlay compared to the 2021-22 defence budget.

The revenue expenditure share out of the total defence budget is 2,70,120 crore INR showing an increase of 13.02 per cent compared to the 2022-23 revenue part (2,39,000 crore INR) of the defence budget.

The data from recent years show that an increase in the overall defence budget and capital expenditure is a significant step by the Indian establishment to address the China challenge and defence modernisation project seriously. There is a significant increase in the overall budget since the India-China border clash. Despite an increase in capital expenditure, the capital outlay as share of the total defence budget has seen a decrement of 1.62%

The numbers show that there has been an increase in the defence budget since 2019 despite the prevailing circumstances of development-related needs or the COVID-19 effect on the Indian economy.

Budget Year	Total defence budget (amount in crores INR)	Percentage increase in comparison to previous year	Capital outlay (amount in crores INR)	Percentage share of capital outlay in total defence budget
2021-22	4,78,195.62	1.45 %	1,35,060.72	28.24 %
2022-23	5,25,166.15	9.8 %	1,52,369.61	29.01 %
2023-24	5,93,537.64	13.09 %	1,62,600.00	27.39 %

Source: Author’s own, derived from the official budget source.

Service-wise allocations and needs

A capital outlay sum of 1,62,600 cr INR of 27.39 per cent of the total defence budget is allotted for three armed services for procurement to maintain operational readiness. A percentage share of 22.9, 32.47 and 35.13 is distributed among Indian Army, Indian Navy and Indian Air Force respectively.

Indian Army

The Indian Army has received 37,241.54 cr INR as part of its capital expenditure fund. This amount constitutes a share of 22.9 per cent of the total capital expenditure budget. In 2022-23, the figure stood at 32,015.26 cr INR for Indian Army. There is an increase of 16.32 per cent compared to the previous year's budget for 2022-23.

The operational requirements and procurements for IA will be more focused on tackling the China challenge in the Himalayas and will aim to procure light tanks and artillery guns to maintain an operational edge over the Chinese armed forces.

Indian Navy

The Indian Navy was the most prioritised service in the 2022-23 defence budget. Last year, its capital outlay was 47,590.99 crore INR, accounting for 31.23 percent of the total defense budget.

In the 2023-24 defence budget, the IN has been allocated 52,804.75 cr INR, an increase of 10.95 per cent. Regarding service-wise allocation, the IN constitutes 32.47 per cent of the total capital outlay budget for 2023-24.

Indian Air Force

The IAF has topped the preferential list among the three services to allocate the highest capital expenditure budget. The 2023-24 capital outlay is 57,137.09 cr INR. IAF bags a 35.13 per cent share of the total capital expenditure in the current budget. There is an increase of 6.3 per cent in allocation compared to 2022-23. In 2022-23, the capital outlay was 55,586.65 cr INR.

The current share of IAF’s capital outlay shows an increase of 2.78 per cent compared to the last year.

Whither Atmanirbharta in Defence Budget?

In light of the 2023–24 budget, there is a continuation of atmanirbhar spirit with a focus on defence innovation and R&D towards developing self-reliance in the defence sector. The DRDO has received an allocation of 23,264 cr INR registering an increase by 9 percent compared to last year’s defence budget.

Increasing capital outlay to support indigenous weapon systems and industry is a bold step to nurture the domestic ecosystem. The section on R&D is budgeted at 12,850 cr INR showing an increase of 7.24 per cent compared to last year's budget. The budget head under Technology Development is allotted 1231.62 crores of rupees to promote ‘Make’ category procurements. Under this head, iDEX and the Defence Testing Infrastructure Scheme (DTIS) have gained an increment of 93 per cent and 95 percent respectively, over 2022–23 budget. There is a significant increase over last year's revised estimates (RE), which is again subject to service utilisation. 

CONCLUSION

The long-term aim of a modernised, future-ready force cannot be achieved with an increase in a year’s budget. But, the China factor in India’s national security calculations and its quest to attain self-reliance in defence have become major factors in setting a positive precedent for achieving the aim of military competitiveness and operational readiness. The will to manage national security challenges is reflected in the overall defence budget and capital expenditure increase. The focus on indigenization, innovation and border infrastructure remain the key highlights setting the stage for a more holistic, inclusive and future-centric view of India’s defence and security policies.

Regarding innovation, the relevant services and agencies must focus more on utilizing the allotted amount in a given period to facilitate the Atma Nirbharta mission and meet operational requirements.